Daily US Stock Market Fundamental & Technical Analysis

Daily fundamental and technical analysis of the US stock market by full time hedge fund manager and options guru, Master Jason Ng (owner and author of Optiontradingpedia.com). Serving investors daily since March 2006.

Stock Market Analysis

Monday, February 05, 2018

Intermediate Correction Starts...

EXACTLY as I have predicted over the last 2 weeks, the US market took a plunge last week with the S&P500 plunging -3.85% in a single week! Here was what I said last Monday:

"the market is in an extreme short term overbought condition with the
timing and position well placed for an intermediate correction this week
or the next."

And indeed it was so! (again, who said the market is an unpedictable random walk?)

In fact, last week's pullback as the strongest single week pullback in 2 years with the last time being in January of 2016!

So, is the pullback done?

Well, I am afraid I do not think so.

The US market remains in grossly short term overbought condition and it would take quite a few bearish/sideways inclined weeks to wear off this condition and for the SMA30 to catch up, before the market can find enough strength to make new highs.

Yes, this is what an intermediate correction is like and its not reasonably going to end without a month or so's volatility.

However, I do not think this is the start of a market crash. Yes, this is just a classic intermediate correction pattern that will set up yet another bull leg going running through the year before the real market crash comes towards the end of the year.

That said, I won't be surprised to see the bulls fight back a bit this week in an attempt that is not likely going to just turn the market back around upwards from here.

Fortunately, despite the volatility, my Ride the Flow strategy continues to profit! Yes, profiting in both steady up trend and even in sudden pullbacks like this! (Learn my Ride the Flow method at http://www.mastersoequity.com/MOE_ridetheflow.htm )

For now, the market turns a short term bear trend within an intermediate bull trend within the framework of a primary bull trend.

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